Amid a challenging economic landscape for Tesla, which includes declining deliveries and intense competition, the company has been forced to make substantial workforce reductions. In a brief internal email, Musk apologized for the severance oversight, which affected an undisclosed number of employees following Tesla's decision to cut over 10% of its workforce—approximately 14,000 people from its 140,000-strong global team.

"As we reorganize Tesla, it has come to my attention that some severance packages are incorrectly low," Musk said in the internal communication. "My apologies for this mistake. It is being corrected immediately." This rare admission of error from the CEO came after Tesla employees shared experiences of being abruptly denied access to the workplace, learning of their layoffs only after being blocked from entering the buildings.

The layoffs and severance package missteps come at a time when Tesla is preparing for what Musk describes as the "next phase of growth." The company has recently reported an 8.5% year-over-year drop in first-quarter deliveries, the first such decline since the pandemic hit in 2020, fueling concerns about Tesla's momentum and leading to a 37% drop in share value this year as of the time of the reports.

Despite the workforce reduction and the severance debacle, Musk's leadership and future with Tesla remain a focal point, with shareholders being asked to approve a CEO pay package for him, equivalent to the record compensation plan originally granted in 2018 but later voided by a Delaware Chancery Court. The legal scrutiny of Musk's prior compensation package highlighted issues around board independence and a sum deemed "unfathomable" by the presiding judge, Kathaleen McCormick.